Chris Browne Resource Page Added to Value Walk

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A permanent page devoted to Christopher Browne has been added to Value Walk. Over the next few months I will be adding 1-2 resource pages a week on famous current and legendary investors. I will keep them a surprise to increase the excitement, so make sure to check back frequently. Or follow me on Twitter, Facebook or Feedburner.

In 2007 a publishing mogul by the name of Conrad Black, who was the former owner of The Daily Telegraph and Chicago Sun-Times, was charged with fraud and sentenced to 6 1/2 years of imprisonment. What led to the fact that Black was running a ‘corporate klepocracy,’ and prompted the board to investigate; was a question posed by Christopher H. Browne, the former Principal of Tweedy Browne & Co. In 2001, Chris Browne raised numerous questions regarding the managerial and accounting aspects of Mr. Conrad Black’s company Hollinger International. According to Browne, Black was utilizing Hollinger’s stockholder’s money to fund his family’s lavish lifestyle. He is famously quoted in BusinessWeek in 2004 that he is not critical of how people live as long as they live off their own personal wealth. It wasn’t until 2007 that the accused was finally convicted and rightly sentenced to jail, but Browne’s indictments were proved true.

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Stocks with small market caps, low price to asset value, low price to earnings ratio, decline in stock price, and significant insider purchases of company stocks are the approaches or criteria, which Christopher Browne and Tweedy Browne & Co was evaluated before delving further into research of the company. A stock with a low Price to Earnings ratio, usually along with low Price to Book Value ratio consequentially having a significant price decline, signals high margin of safety in relation to its intrinsic value (in terms of earnings and asset value). Moreover, in order to ensure high performance, it is preferable for these stocks to be purchased and held by the company insiders, so the float remains insignificant enough to be overlooked by large institutions. Additionally, it usually is a good sign if the insiders are buying, since they know the company the best.